California’s Prosperity Terminating Lessons for the UK

As if the UK economy doesn’t have enough problems, the new coalition government is going out of its way to create new ones, by pursuing its self-indulgent ‘clean’ energy policy.  You’d imagine that it would be self evident that cutting greenhouse gas emissions by 34% within 10 years is completely hair brained – and reducing emissions by 80% in 2050 is economic suicide.  But developments in California may soon highlight the prosperity terminating effect of such clean energy policies – now that it has become a major election issue in the California midterms.

For now, most Californians apparently believe the propaganda that efforts to cut greenhouse gases actually create new jobs. But severe debt deflation is changing the political landscape. With unemployment at 12.3% and employment appearing to fall again, the economic picture is so bleak that even those who believe in global warming are having second thoughts about California’s Global Warming Solutions Act of 2006 – better known as AB 32.

Mirroring the UK’s greenhouse gas cutting goals, AB 23 requires the state’s CO2 emissions to be reduced by 25-30% to 1990s levels. And despite the population being expected to nearly double to 59 million from 34 million, emissions are to be cut by 80% by 2050.  However, Proposition 23, would suspend AB32 until unemployment stays below 5.5% for four consecutive quarters, has won enough support to be put to a referendum in November.

Former Hewlett Packard CEO Carli Fiorina, who is running for the Republicans, may have been a little hesitant in supporting the initiative – given that 53% of the electorate still support AB 23 – but she is now squaring up to her Democratic opponent, Senator Barbara Boxer, over the issue.  She says AB-23 is a “job killer” and that the science needs to be properly looked at before U.S. companies are put at a severe competitive disadvantage in the global marketplace.  Meanwhile, Boxer, apparently still believes a pathetically small number of green jobs will solve California’s economic problems.

Naturally, such a crackpot policy will not create lots of fantasy green jobs, but only destroy millions of ordinary ones and hobble the economy. Even the California Air Resources Board now admits that AB32 will cost jobs.  A study by Charles River Associates, funded by CARB and using CARB’s own data found the agency’s worst-case assumption of a 1.4% drop in Gross State Product was the best case scenario, and that a $1,175 drop in household income is the best possible result.  Even the loss of 1.1 million jobs, that a 2009 study commissioned by the California Small Business Roundtable forecast, could be conservative.

That the Republicans even have a shot in a blue state like California says a lot about the state of the U.S.. But California’s deficit is $19 billion and ballooning out of control – in large part because of unfunded public sector pensions – and this is having a sobering effect on an electorate who are characteristically eager to follow the latest fashionable cause.

It’s doubtful, though, that they are willing to ‘save the planet’ if it means ruining themselves.  After all, they already have some the highest energy prices in the country.  Judging by the nationwide backlash against the stimulus, labelling Boxer a tax and spend politician may be a vote winner for Fiorina. Boxer in turn says Fiorina is in the pocket of “big oil and dirty coal.”

But as evidence grows of the limited number of jobs the renewable energy industry can create – apart from the ones being exported abroad – it wouldn’t be surprising if support for Proposition 23 gains traction in the next couple of months.

Related: Britain’s Energy Policy Is In Crisis [Daily Telegraph]